Finding tomorrow’s hot property, TODAY Location Report A joint publication of Edwards Windsor & Ryder Property Research

HOBART

September 2020

For more information contact: Edwards Windsor Level 2, 89 Brisbane Street Tas 7000 Ph: (03) 6234 5500 www.ewre.com.au Email: [email protected] HOBART Tasmania

Highlights • Affordable house prices • $1.4 billion City Deal • Low vacancies, high yields • $700 million hospital upgrade • Strengthening economy • $2 billion Macquarie Point Master Plan • $400 million education precinct

Suburb - Typical Suburb - Typical Suburb - Typical houses prices houses prices units prices Claremont $3880,000 Kingston $540,000 Bellerive $435,000 Glenorchy $390,000 Lindisfarne $595,000 New Town $470,000 Howrah $565,000 Moonah $445,000 Sandy Bay $590,000

Hobart continues to be the strongest property market in capital city . This is underpinned by the nation’s strongest state economy and its economic future is now fortified by the $1.4 billion City Deal signed by three levels of government. Tasmania’s economy gathered strength throughout 2019 and is now ranked the No.1 state for economic performance, according to CommSec’s State of the State report. Significant projects in the pipeline include an international airport to encourage direct flights for tourists,an Antarctic and Science Precinct at Macquarie Point, and a light rail network. The steady rise of the state economy in recent years has had a major impact on the Hobart property market. Homes sell faster in Hobart than anywhere else, price growth leads capital city Australia, and vacancies are the tightest of the capital cities, having been below 2% for seven years (and remain so, despite the impact of the pandemic). Hobart presents an attractive package to investors, with affordable prices compared to the big cities, as well as attractive rental yields and low vacancy rates.

HOBART Tasmania 2 Population and Demographics Greater Hobart encompasses a region from Kettering in the south, Mt Wellington in the west, Brighton to the north and Marion Bay and Blackmans Bay to the east. Location Within Greater Hobart, at the 2016 Census there • South-east Tasmania, on the estuary were fewer residents of working age (i.e. those of the Derwent River. aged from 25-49) than the national average – • 1.25-hour flight to Melbourne. 32% compared to 35%; but the number of people aged over 50 (38%) was higher than the national • 3-hour drive to Devonport (where average of 34%. ferries from Melbourne dock). The more common occupations are: • The Midland Highway runs north- • professionals (23%) south, connecting Hobart to Launceston and Devonport. • clerical & administrative workers (15%) • technicians & trades workers (13%) • community & personal service workers (13%) • managers (11%). Tasmania has a high concentration of Antarctic and Southern Ocean scientists, according to Wikipedia. Economy and Amenities Greater Hobart incorporates the LGAs of: Population 1. : The CBD and surrounding Greater Hobart: 222,300 suburbs such as Battery Point, North Hobart and Median age: 40 Glebe.

2. : Eastern shore of Derwent River Source: 2016 Census but west of Hobart International Airport. 3. : Northern suburbs of Hobart, but west of the Derwent River. (The Glenorchy City Council was sacked in 2017 following a Board of Inquiry which uncovered governance Hobart supports the development of about 150 failures and “unethical” leadership. A new mayor postgraduate students who will become the next and aldermen were elected in January 2018.) generation of Antarctic scientific researchers. 4. : South of Hobart CBD and The CSIRO’s Marine and Atmospheric Research including Bruny Island. Division in Hobart has Australia’s largest marine Hobart is the financial and administrative heart of research library and also employs 300. CSIRO’s Tasmania. It also serves as the home port for both facilities include ocean marine laboratories, Australian and French Antarctic operations. engineering workshops and the $120 million vessel Australia has had a presence in Antarctica for 100 RV Investigator. years and Hobart’s proximity to East Antarctica and This sector employs around 1,200 and contributes the Southern Ocean makes it suitable as a port for more than $180 million annually to the Tasmanian scientific research. Gross State Product, with the flow-on effect There are 830 people working in the local Antarctic estimated to be about $260 million. community, including 200 in the private sector and But Hobart’s connection to Antarctic research is not 630 scientists and technical staff. exclusively Australian.

HOBART Tasmania 3 The French Antarctic program boosts the southern Tasmanian economy from its use of Tasmanian shipping agents for food, fuel, boating supplies and waste disposal services. The city is also a hub for cruise ships during the summer months, with up to 40 ships carrying 100,000 passengers docking during the season. - Light Industry Hobart supports a host of light industry manufacturers. Major local employers include catamaran builder Incat, zinc refinery Nyrstar, , Cadbury’s Chocolate Factory and Norske Skog which produces around 290,000 tonnes of newsprint and paper annually. - Tourism Tourism plays a key role in Hobart’s economy. In - Education 2017, there were 1.26 million visitors to Tasmania, up The main provider of tertiary education in Hobart is 2% on the previous year, according to the Tasmanian the University of Tasmania. It claims to be ranked in Visitors Survey. The majority arrived via Hobart. the top 2% of universities worldwide and have 29,000 Total spending by visitors rose 8% in 2017, with the local, national and international students. average visitors spending $216 per night. The university’s extensive array of faculties located The number of international visitors rose 17%. around the city include: Hobart’s rich history as a penal settlement, its • the Tasmanian Conservatorium of Music heritage-listed architecture and snow-capped Mt Wellington are just some of the reasons why tourists • the Tasmanian Centre for the Arts visit Tasmania every year. • a multi-million dollar Medical Sciences Precinct Other attractions include , the site which includes the School of Medicine of restaurants, galleries, craft shops and offices as • the Menzies Research Institute and well as a weekly market with 300 stallholders selling produce and arts & crafts. • the School of Health Sciences. The annual Sydney-to-Hobart yacht race creates There is the Faculty of Science, Engineering and much excitement at in the Port of Technology, the University Farm near Richmond, Hobart where the race finishes on New Year’s Eve. which is the site for agricultural research, the Running since 1945, the race has become one of University’s observatories and the Grote Reber the top three offshore yacht races in the world and Physics Museum at Cambridge. attracts around 100 international competitors. The Institute for Marine and Antarctic Science, a Wineries have become popular in the last 15–20 specialist institute of the University, is located in new years with many popular vineyards located around $45 million premises which provide teaching and the Derwent, Coal River and Huon Valleys. research facilities for around 290 staff and students. The Wrest Point Hotel Casino in Sandy Bay was Several TAFE colleges can be found across Hobart. Australia’s first legal casino, opening in 1973. - Health In the past few years, $78 million has been spent on upgrades to the Hobart International Airport, Hobart is serviced by the Royal Hobart Hospital and allowing it to accommodate mainstream international two private hospitals. commercial flights, a direct route to South-East Asia The Royal Hobart Hospital is Tasmania’s largest and more international charter flights. hospital and as the major clinical teaching and The airport employs 820 and contributes $143 research centre, it works closely with the University million into the state’s economy each year. of Tasmania. The hospital employs around 3,000.

HOBART Tasmania 4 Property Profile HOME OWNERSHIP For the first time since October 2009, Tasmania holds the mantle of the best performing state economy in • 33% own their homes outright its own right, according to the July 2020 edition of • 35% own with mortgages Commsec’s State of the States report. This, combined with Tasmania’s solid results • 29% rent their homes produced in defiance of the pandemic, brings benefits to the Tasmanian property market. There has been continued growth in both sales and prices - Rental Shortages in the last 12 months. Prior to the impact of the coronavirus, Greater Hobart, Darwin and Canberra were the only capital Hobart experienced a critical shortage of rental cities to record an increase in dwelling prices over properties, earning the city the reputation of being the three months to August 2020, says CoreLogic’s the least affordable capital city in Australia for Home Value Index. tenants, according to the Rental Affordability Index. Throughout 2019, CoreLogic’s monthly Home Value Vacancy rates had been below 1% for several years. Index reports showed annual median price growth But the coronavirus ushered in a flood of ex-Airbnb in Hobart in every month, while valuation firm properties on to the rental market. This may have Herron Todd White noted good growth of 6–10% in a positive result in Hobart by easing the housing median house prices in suburbs such as Rokeby, shortage with additional supply, although the city’s Bridgewater, Lenah Valley, Lindisfarne, Geilston Bay vacancy rates remain among the nation’s lowest. and Sorell. - Affordablity, High Yields, Lifestyle - Profit on Resales Hobart appeals because of its affordability, high Hobart led the nation with the highest portion of yields and lifestyle. Agents report a lot of interest profit-making property sales in the March 2020 has been coming from Melbourne and Sydney where Quarter, according to CoreLogic’s Pain & Gain Report. some buyers have been priced out of the market. In Hobart 99.4% of sales were at a profit and in Hobart also offers a cooler climate for those who Kingborough the figure was 99.1%. Following closely don’t like the harsh heat in some parts of Australia. at 97% were Glenorchy and Clarence while Hobart HTW says the past few years have seen climate also recorded the highest median profit at $315,625. changers coming to Tasmania from Queensland and Western Australia to escape the heat. These results build on the positive impetus that has been developing in Tasmania for some time; the Hobart is Australia’s second oldest city behind Hobart property market has been leading capital city Sydney, so there are plenty of character cottages Australia in recent years. to be found. But there are also modern homes and . Standalone houses make up 85% of all CoreLogic’s Pain & Gain Report for the September dwellings while 15% are units, flats or townhouses. 2019 Quarter revealed that every home sold in three of the Greater Hobart municipalities made a profit Many Hobart suburbs have median house prices for the vendors. under $400,000, including Berriedale, Bridgewater, Claremont, Glenorchy and Rokeby, shows data from The successful run of good capital growth continued CoreLogic. into the December 2019 Quarter with no loss making sales recorded in the Clarence and the Derwent Strong median returns are a feature; seven suburbs Valley council areas, according to CoreLogic. offer median yields of 5.0% or higher including Bridgewater (6.7%) and Rokeby (6.2%). CoreLogic’s head of residential research, Eliza Owen, said Hobart was the capital city region that The weekly median rent in Bridgewater is $355 with had seen the highest level of profit-making sales. Rokeby being a little higher at $385. She said Hobart had been tracking close to The median unit price in Bellerive is $725,000 after historically low levels for loss-making resales. recording a 29% rise in the last 12 months.

HOBART Tasmania 5 Bridgewater (median $275,000) and Lenah Valley ($620,000) each recorded double digit growth in the Vacancies across Greater Hobart last year while Kingston ($540,000) had the highest number of annual sales at 168. have been below 2.0% since 2013. Strong price growth of 32% at New Town over the last 12 months has delivered a median unit price SQM Research, July 2020 of $470,000. However, sales activity has gradually weakened in 2020. When it comes to units, Glenorchy has been a more consistent performer. Based on 85 annual sales, it has a median unit price of $320,000. This price is 12% higher than a year ago and 47% above the price point of 2015. Investors can expect a median unit rent of $330 in Glenorchy to deliver a return of 5.4%, while $340 in Claremont will produce a yield of 5.5%. - Vacancy Rates With the exception of South Hobart and Sandy Bay, Hobart vacancies are extremely tight and mostly well below 1.0%. Vacancies in South Hobart and Sandy Bay had been below 3% for five years, only rising above the benchmark point briefly in April and May 2020 before falling again. Across Greater Hobart, vacancies have been below 2% for seven years - and remain so, despite the influx of rental properties due to Covid-19.

HOBART VACANCY RATES

Postcode Suburbs Vacancy rate

7004 South Hobart 2.6 % 7005 Sandy Bay 2.2 % 7008 Lenah Valley, New Town 0.7 % 7009 Lutana, Moonah, West Moonah 0.5 % 7010 Glenorchy 0.2 % 7011 Claremont 0.3 % 7015 Geilston Bay, Lindisfarne 0.8 % 7018 Bellerive, Howrah 0.3 % 7050 Kingston 0.5 % 7052 Blackmans Bay 0.5 %

Source: SQM Research

HOBART Tasmania 6 The house market in Hobart can be summarised in this sample of suburbs:

Sales 1-year Growth Median Suburb Median Houses Houses Growth Average Yield Bellerive 35 $725,000 29 % 6 % 3.4 % Berriedale 40 $395,000 5 % 5 % 5.5 % Blackmans Bay 90 $605,000 3 % 4 % 4.2 % Bridgewater 50 $275,000 14 % 5 % 6.7 % Claremont 98 $380,000 4 % 4 % 5.5 % Geilston Bay 54 $515,000 8 % 4 % 4.7 % Glenorchy 135 $390,000 3% 4 % 5.6 % Howrah 130 $565,000 6% 5 % 4.3 % Kingston 168 $540,000 7 % 4 % 4.8 % Lenah Valley 73 $620,000 12 % 5 % 4.4 % Lindisfarne 77 $595,000 8 % 5 % 4.3 % Margate 56 $595,000 5 % 5 % 3.9 % Moonah 65 $445,000 1 % 6 % 5.3 % New Town 74 $680,000 3 % 6 % 4.0 % Rokeby 64 $320,000 7 % 5 % 6.2 % Sandy Bay 130 $920,000 -1 % 4 % 3.4 % Sorell 63 $430,000 4 % 2 % 5.1 % South Hobart 54 $675,000 3 % 6 % 4.2 %

The suburbs listed below are a sample of the Hobart unit market:

Sales 1-year Growth Median Suburb Median Units Units Growth Average Yield Bellerive 32 $435,000 9 % 4 % 3.4 % Claremont 41 $320,000 2 % 5 % 5.5 % Glenorchy 85 $320,000 12 % 4 % 5.4 % Hobart 96 $610,000 9 % 4 % 4.5 % New Town 41 $470,000 32 % 7 % 3.9 % Sandy Bay 77 $590,000 3 % 4 % 4.1 %

Source: CoreLogic – “No. of sales” is the number of house sales over 12 mths; “Growth ave.” is the average annual growth in median house prices over 10 yrs.

HOBART Tasmania 7 Future Prospects CORE INFLUENCES Tasmania’s economy continues to perform strongly, according to Commsec’s latest State of the States Boom Towns report, leading the nation on four of the eight economic indicators in the July 2020 Quarter. It is Lifestyle Features ranked first on population growth, unemployment, equipment investment and retail trade while ranking Cheapies with Prospects second on construction work and dwelling starts. This builds on earlier successes. In 2018, Tasmania’s commercial construction sector was described as a “standout performer”, increasing by 40% over International Airport the previous two years to $1.8 billion with another is to evolve into an international $1.7billion in the planning stages. airport under a series of upgrades by 2024. The activity has been led by the $700 million A $200 million Terminal Expansion Project (TXP) will redevelopment of the Royal Hobart Hospital, while see the terminal double in size over three stages. Mona’s $400 million hotel proposal heads the list of projects in the pipeline. The initial stage will cost $100 million and will be completed by December 2020. This stage includes Smaller projects have also been contributing: the expansion of the existing departure lounge. • the InterContinental Crown Plaza Hotel has This follows the $40 million runway extension finally been completed creating110 jobs; completed in 2018 and will add to the $82 million project funded by the Australian Government to • Nyrstar zinc smelter has carried out an $11 install customs and immigration services. million maintenance program; The upgrades will capitalise on Tasmania’s current • the Murray St Pier is about to receive an $8 appeal to international visitors. million transformation to create the Franklin International flights will stimulate regional Wharf precinct; economic growth and employment opportunities. • there are plans to spend $10 million in converting It is estimated the total economic benefit is $128 the Hobart Navy Club into units and student million per annum with 680 additional jobs. accommodation; As well as increased tourism, it will open up opportunities for Tasmanian primary producers • the Peacock Centre, North Hobart is to be rebuilt and exporters to directly export to international at a cost of $9 million after it was destroyed by fire. markets, guaranteeing products are delivered faster - City Deal and fresher, increasing Tasmania’s competitive advantage. On the horizon is the City Deal which offers more Antarctic and Science Precinct at Macquarie Point opportunities; three levels of Government signed the Establishing an Antarctic and Science Precinct $1.4 billion Hobart City Deal in February 2019. at Macquarie Point has the potential to create a Projects to be delivered over the next 10 years via prominent gateway that promotes Hobart’s status the City Deal include: as an Antarctic and Southern Ocean research • a new international airport; powerhouse. • an Antarctic and Science Precinct at Macquarie The Precinct would be complemented by the Australian Government’s $1.9 billion icebreaker Point; due to arrive in 2020 and $450 million in additional • a $576 million upgrade to Bridgewater Bridge capital expenditure on Antarctic research stations. and other measures to reduce traffic congestion, Bridgewater Bridge including a light rail system; and The Bridgewater Bridge, which crosses the Derwent • funding agreements have been signed with River, is a critical part of the transport and freight community housing providers for 100 new social link between the northern and southern regions of housing homes in the Greater Hobart region. Tasmania.

HOBART Tasmania 8 Reduction of Traffic Congestion - Tourism Some of the identified measures to reduce traffic Tourism has gained momentum as a powerful congestion include the construction of the Hobart economic driver in Tasmania’s economy. Transit Centre, additional Derwent ferry services, In the 12 months to September 2018, over 1 million road upgrades and a light rail system to the northern people visited Hobart and its surrounds. suburbs. Museum of Old and New Art (MONA) Funding of $125 million has been allocated to these projects. MONA, at Berriedale, has turned into the island’s biggest tourist attraction. It is the largest privately- Activation of the light rail system would see the funded museum in Australia. Opened in 2011, it also decommissioned railway tracks that run from hosts festivals and live performances. Macquarie Point and through Hobart’s Northern Suburbs, including through all Glenorchy’s major MONA’s owner plans to add a 5-star hotel, 1,075- commercial areas, transformed into the Northern seat theatre and 1,000-seat conference centre to the Suburbs Rail Corridor. complex on the banks of the Derwent River. In another sign of Hobart’s growing prosperity, the The State Government, supported by $25 million in largest amount of new office stock in 25 years has funding from the Federal Government, plans to carry out a study on the proposed project. been added to the Hobart CBD market, says the Property Council of Australia. The University of Tasmania plans to build a $400 million science, technology, engineering and maths Numerous older buildings are being either re- (STEM) facility in the Hobart CBD. The proposal is purposed or knocked down and replaced with hotels for the development of a purpose-built STEM facility and commercial buildings. This activity is primarily for tertiary education, research and training in the aimed at tourism. centre of Hobart. Hotel developments worth $855 million, with an This would relocate the University of Tasmania’s extra 2,500 rooms, are either under way or proposed. Faculty of Science, Engineering and Technology from There are also plans for an entertainment precinct the existing campus at Sandy Bay to a new facility in at Glenorchy’s Wilkinson’s Point. The $260 million the Hobart CBD. proposal includes food and beverage outlets, a The university says it would accommodate 3,000 204-room hotel, a rejuvenated 5,000-seat Derwent students and 700 staff. Construction of the project is Entertainment Centre and a multi-court indoor expected to be finished in 2021. sport facility.

Major projects currently impacting the region are: INFRASTRUCTURE – HEALTH AND MEDICAL FACILITIES

Project Value Status Impact Royal Hobart Hospital $700 million Under construction redevelopment

State & Federal Govts

New Tasman Private $55 million Proposed Jobs: 130 Hospital, old WIN TV An integrated medical site centre and hospital is Nexus Hospitals JV planned Contact Group

HOBART Tasmania 9 INFRASTRUCTURE – TRANSPORT

Project Value Status Impact Hobart International $82 million Approved Improvement will allow Airport upgrade (2) The terminal will be Part of the City Deal direct international upgraded to include flights into Hobart border security

Hobart International $200 million Proposed Jobs: 120 during Airport upgrade (3) Stage 1: Improved construction terminal facilities

Hobart Airport $50 million Under construction roundabout upgrade Completion expected in 2022

Midland Highway $500 million Under construction upgrade A 10-year project

Federal & Tasmanian Governments Glenorchy to Hobart TBA Proposed The plan will generate Public Transport A light rail project Part of the City Deal commercial, retail and Corridor Project community projects along the corridor

Bridgewater Bridge $576 million Proposed Trains will continue to replacement Federal Govt will Part of the City Deal use the old bridge contribute $461mil, State Govt $115 mil

RESIDENTIAL DEVELOPMENTS

Project Value Status Impact Whitewater Park $60 million Under construction residential estate, Kingston

WWP Developments Spring Farm $150 million Under construction 500 homes on 290 lots sub-division, Kingston are planned

Garrington Park, New $70 million Under construction 114 lots are planned Town

HOBART Tasmania 10 INFRASTRUCTURE - EDUCATION

Project Value Status Impact The Hedberg, $96 million Approved Jobs: 280 construction Creative Industries Includes a 60 operational; and Performing Arts Conservatorium of Economic benefit: $660 Precinct Music, a 300-seat million; 3,000-8,000 recital hall, 300-seat new students University of Tasmania studio theatre New STEM precinct, $400 million Proposed Jobs: 700 Hobart CBD Would service 3,000 students University of Tasmania

Sorell School upgrade $25 million Approved Construction will begin in 2021 and be completed by 2023

New public high school, $30 million Proposed Brighton

State Govt

COMMERCIAL DEVELOPMENTS

Project Value Status Impact Macquarie Point $2 billion Proposed Transformation of old Masterplan Commercial, retail and rail-yards land recreation space on an Macquarie Point Devt 8ha site Corp

Antarctic and Science $450 million Proposed It would develop Precinct, Macquarie Part of the City Deal Antarctic education, Point diplomacy and business

Claremont Golf Club $100 million Proposed A hotel, marina and redevelopment serviced apartments are planned Chinese consortium

Wilkinson’s Point $260 million Proposed Jobs: 1,100 precinct, Glenorchy Retail, food, beverage and specialty space

HOBART Tasmania 11 COMMERCIAL DEVELOPMENTS

Project Value Status Impact Motown, 5-star $400 million Proposed Jobs: 450 construction hotel and art gallery, 172 rooms, 1075 seat 120 operational Berriedale theatre and 1000 seat conference centre David Walsh

Hotel, 28-30 Davey St $130 million Proposed A 400-room hotel is planned Fragrance Group

Parliament Square $150 million Under construction Jobs: 400 redevelopment Includes a new office building, hotel and Citta Property Group retail outlets

4.5 star hotel, ICON $100 million Under construction Redevelopment of the Complex, Argyle St Myer site

Radas Property

Cable car, $50 million Proposed Jobs: 200 construction Kunanyi/Mt Wellington 50 operational

Mount Wellington Cableway Company

Lenna of Hobart hotel, $60 million Proposed The heritage-listed Battery Point hotel would be converted into a 6-star hotel with 85 rooms

New hotel and $80 million Proposed hospitality training school, Rosny

Shandong Chambroad

New hotel, 179 TBA Proposed A 206-room hotel is Macquarie St DA Lodged June 2019 planned

HOBART Tasmania 12